Maldives: Enhancing Tax Administration Capacity

Sovereign Project | 47150-001

Summary

The proposed TA aims at strengthening the revenue collection capacity of MIRA. More specifically, MIRA is expected to increase revenue collection through: (i) the introduction of ICT initiatives to increase voluntary tax compliance; (ii) strengthening its tax audit system to enforce tax compliance; and (iii) the effective implementation of current tax legislation and policy as well as the pursue and implementation of further tax policy reforms.

Latest Project Documents

Title Document Date
Enhancing Tax Administration Capacity Dec 2013

Consulting Notices

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Procurement Notices

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Procurement Documents

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Project Name Enhancing Tax Administration Capacity
Project Number 47150-001
Country Maldives
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8525-MLD: Enhancing Tax Administration Capacity
Japan Fund for Poverty Reduction US$ 850,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Sector / Subsector Public sector management - Public administration
Gender Equity and Mainstreaming
Description The proposed TA aims at strengthening the revenue collection capacity of MIRA. More specifically, MIRA is expected to increase revenue collection through: (i) the introduction of ICT initiatives to increase voluntary tax compliance; (ii) strengthening its tax audit system to enforce tax compliance; and (iii) the effective implementation of current tax legislation and policy as well as the pursue and implementation of further tax policy reforms.
Project Rationale and Linkage to Country/Regional Strategy The Maldives' fiscal situation is under severe stress and an effective fiscal consolidation program remains paramount to the government's goal of enhancing service delivery including outreach while strengthening macroeconomic and financial stability. The fiscal deficit as a percentage of gross domestic product (GDP) was 12.6% in 2012, one of the highest among the developing member countries of the ADB. The widening fiscal deficit is caused by two principal factors: (i) increased government expenditures including added pressure to deliver public services, especially in view of the challenges posed by the country's archipelagic nature and its exposure to climate change risks; and (ii) the limited revenue collection capacity of the country's nascent tax administration. On the expenditure side, a proposed World Bank TA will address the rationalization of government expenditure. On the revenue side, this TA will build on ADB's earlier support toward establishing the MIRA. As recently as 2008, with ADB's Economic Recovery Program (ERP), the government introduced comprehensive tax reforms leading to the roll-out of a modern taxation system. Despite important achievements, the full roll-out is not complete and further work is required to diversify tax policy and further strengthen tax administration capacity. In line with the proposed assistance, the International Monetary Fund has acknowledged that addressing the fiscal deficit is the most pressing macroeconomic priority, and emphasized the need to implement tax policy reforms and strengthen tax administration capacity.
Impact Improved fiscal position
Project Outcome
Description of Outcome Enhanced capacity of MIRA in tax administration
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

1. Taxpayer services capacity of MIRA enhanced

2. Audit capacity of the MIRA strengthened

3. Readiness of the MIRA to effectively implement tax policy reforms strengthened

Status of Implementation Progress (Outputs, Activities, and Issues)

All individual consultants have been recruited and have started advising MIRA on tax policy implementation, audit and ICT developments

The projects is in the final stages of recruiting an ICT firm for the CRM module.

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design The proposed technical assistance (TA) is highly relevant to further expand tax revenue administration capacity against the backdrop of a weak fiscal situation in the Maldives. A consultation mission to assess the feasibility of supporting the Maldives Inland Revenue Authority (MIRA) was fielded in December 2012. A fact-finding mission was fielded on 18 21 February 2013. On 28 February 2013 the Government of the Maldives formally requested the Asian Development Bank (ADB) to provide a TA. The Office of the Vice-President cleared the TA on 9 May 2013 as it was not part of the country operations business plan. The government concurred with the impact, outcome, outputs, implementation arrangements, cost financing arrangements, and terms of reference.
During Project Implementation Supported by the consultant team, the MIRA will organize conferences with stakeholders, including officials from the Japanese National Tax Agency, to share and disseminate findings. The outputs of the TA will be widely disseminated online as well as through publications.
Business Opportunities
Consulting Services A consulting firm (international, 20 person-months) will be recruited to develop the CRMS. Procurement method will be QCBS (quality:cost ratio of 90:10 since the services required are highly specialized) and selection will be evaluated on the basis of simplified technical proposals. In addition, one tax administration (tax audit) specialist (5 person-months) and a tax policy specialist (2 person-months) will be recruited as individuals. The two individual consultants have a very specialized type of skill set (preferably former tax authority officials with hands-on experience) and cannot be recruitment through the consulting firm. Two IT specialists will also support the functional requirement study and the existing SAP-based computer system. An IT consultant will also be recruited to provide remote advisory support to MIRA to help resolve critical issues and offer guidance on system upgrades. All consultants will be recruited according to the Asian Development Bank (ADB) Guidelines on the Use of Consultants (April 2010, as amended from time to time). The cost estimate for consultants is $578,200.
Procurement Hardware (servers and network accessories) worth $240,000 to support the development of CRMS will be procured.
Responsible ADB Officer Natalie D. Bertsch
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Executing Agencies
Ministry of Finance and TreasuryAmeenee Magu
Male'
Republic of the Maldives
Timetable
Concept Clearance 08 May 2013
Fact Finding 18 Feb 2013 to 21 Feb 2013
MRM -
Approval 04 Dec 2013
Last Review Mission -
Last PDS Update 16 Mar 2015

TA 8525-MLD

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
04 Dec 2013 03 Mar 2014 03 Mar 2014 31 Dec 2015 30 Jun 2016 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 850,000.00 150,000.00 0.00 0.00 0.00 1,000,000.00 04 Dec 2013 349,114.19
Title Document Type Document Date
Enhancing Tax Administration Capacity Technical Assistance Reports Dec 2013

Safeguard Documents

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